AZZ sets record sales as galvanizing demand surges

AZZ Inc. posted record sales in its fiscal third quarter, driven by strong hot-dip galvanizing and coil coating demand tied to infrastructure, energy transition, and data center construction.

“We achieved record sales of $426 million in the third quarter, surpassing any quarter in our company’s history,” CEO Tom Ferguson said on an earnings call on Thursday.

All told, the Fort Worth, Texas-based galvanizer and coil coater posted net income of just over $41 million on sales of $425.7 million in the quarter ended Nov. 30, 2025. While sales rose 5.5% year over year, net income jumped 22%.

The Metal Coatings segment led the quarter with 15.7% sales growth. The segment saw higher volumes and broad project activity in construction, industrial, and electrical transmission and distribution.

Precoat Metals’ sales fell 1.8% year over year due to weaker construction, HVAC, and transportation markets. However, management said excess imported pre-painted metal has now “worked its way through the market.” And with tariffs expected to remain in place, Precoat should benefit as US buyers shift back to domestic suppliers.

Infrastructure and energy drive coatings demand

AZZ reported strong demand for galvanizing from grid upgrades, solar installations, LNG power projects, and industrial reshoring.

The company also highlighted a surge in activity tied to data centers.

“These market sectors depend on galvanized steel and coated materials,” Ferguson said, noting that AZZ’s scale and proprietary coating technologies position it to capture multi-year projects.

Surging data center demand

Data center construction is emerging as one of the strongest demand drivers for AZZ’s galvanizing and coil coating businesses.

Management said on the conference call that hyperscale projects now require coated steel for far more than just structural components.

As David Nark, chief marketing, communications, and investor relations officer, put it, “These hyperscale data centers require coatings that extend well beyond just structural steel… including corrosion protection, esthetics, functionality, fire safety, and regulatory compliance.”

These builds also trigger parallel investment in co-located power generation and grid upgrades, creating multi-year demand for coatings across transmission and distribution, management said.

AZZ expects this wave of AI-driven data center construction to be a long-term tailwind for both Metal Coatings and Precoat Metals.

Aluminum coatings get boost

The company also cited ongoing conversion from plastics to aluminum in the container market, which is boosting coated aluminum volumes. AZZ’s new Washington, Mo., coil coating facility is ramping up toward a 75% exit rate in fiscal Q4, adding incremental capacity.

Investments and expansion

Capital expenditures totaled $18.5 million during the quarter. Year-to-date capex amounts to $58.7 million, with full-year spending expected between $60 million and $80 million.

The company continues to evaluate bolt-on M&A opportunities in both Metal Coatings and Precoat Metals, with Ferguson describing the pipeline as “very active.”

Outlook

AZZ narrowed its fiscal 2026 guidance to sales of $1.625 billion to $1.7 billion and adjusted EBITDA between $360 million and $380 million.

Management believes infrastructure spending, energy transition projects, and accelerating data center construction will keep coatings demand strong this year. Precoat Metals is expected to stabilize as tariffs curb imports and as the Washington facility reaches full run-rate production.

“We are well-positioned to capitalize on our growing pipeline of M&A opportunities,” Ferguson added.